FX.co ★ US-China trade war escalation may trigger another financial crisis

In the near future, the world may face another financial crisis caused by the trade conflict between the United States and China. The military and economic steps taken by the two largest world economies have a negative impact on every aspect of the global economy. It is quite disturbing because both parties have not spilled over into outright confrontation yet.

Europe which is still unable to deal with Brexit is particularly sensitive about every new change in the tariff battle. Portfolio manager at American Century Investments Trevor Gurvich said that the European market had been too optimistic about a quick and easy trade deal between the US and China. That is why the local exchanges were not ready for the parties' refusal to sign an agreement and bury the hatchet. The British FTSE 100 fell by 1.04 percent, the German DAX plunged by 1.49 percent, the French CAC slumped by 1.56 percent, while the Spanish IBEX 35 and the Italian FTSE MIB dropped by 0.93 percent and 2.56 percent, respectively. As for the American market, it turned out to be more resistant to the conflict. Despite the fact that after the recent escalation, it had lost almost a trillion dollars a day, it managed to recover.

If the main parties to the conflict fail to agree, the economic development is likely to be at risk. Therefore, if the US-China trade war escalation continues, it may can trigger a financial crisis of unprecedented scale.